Germany, Britain and France agree to bank levy

Germany, Britain and France agree to bank levy
Photo: DPA
Britain, France and Germany have agreed to introduce levies on banks to make them help pay for global recovery, the European heavyweights said in a joint statement Tuesday.

“The governments of France, the United Kingdom and Germany propose to introduce bank levies based on banks’ balance sheets,” they said, as Britain’s finance minister announced a banking tax from next January.

The action is to that ensure banks “make a fair and substantial contribution towards paying for any burdens associated with government interventions to repair the banking system or fund resolution in a financial crisis,” it added.

“The United Kingdom bank tax is announced today,” the statement said, referring to Osborne’s emergency budget, unveiled after Prime Minister David Cameron’s Conservatives won elections last month.

It noted that Germany announced a framework for a national bank levy at the end of March “and will present draft legislation in the Cabinet in summer.”

France “will present the details of its bank tax in the coming budget,” due later this year, it added.

“All three levies will aim to ensure that banks make a fair contribution to reflect the risks they pose to the financial system and wider economy, and to encourage banks to adjust their balance sheets to reduce this risk,” it said.

“The specific design of each may differ to reflect our different domestic circumstances and tax systems, but the level of the levy will take into consideration the need to ensure a level playing field.”

The statement added that British, French and German leaders “look forward to discussing these proposals further with international partners” at a Group of 20 summit in Canada this weekend.

Berlin downplays rift with US

Ahead of the G20 gathering, German Chancellor Angela Merkel’s government was working hard to dispel the impression of a row with Washington.

A government source in Berlin said on Tuesday that the United States was not applying any pressure on Germany on economic policy

US President Barack Obama and Merkel were “largely in agreement” on how best to move beyond the crisis during a pre-G20 phone call Monday, added the source, who did not wish to be named.

There was “no pressure” from Washington on the subject of economic policy, the source added, and the pair agreed on a “differentiated exit” from emergency stimulus measures put in place at the height of the financial turmoil.

Last week, Obama sent a letter to other world leaders in which he said he was “concerned by weak private sector demand and continued heavy reliance on exports by some countries with already large external surpluses.”

He added that governments must “learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession.”

Many viewed this as an attack on Germany, which has announced a huge austerity package worth at least €80 billion ($98 billion) between next year and 2014 and is the world’s second biggest exporter after China.

However, the German source dismissed reports of a transatlantic spat.

“The Obama letter showed fewer differences (between Berlin and Washington) than have been reported,” the sources said, adding: “We are in agreement.”

On Monday, Merkel herself hit back at the perceived criticism, saying the package was “not about a radical savings programme” and stressing the measures would foster sustainable growth by investing in areas such as education.

“I think that when we explain this, no one will be able to say that we are not doing enough for growth,” she said.

Member comments

Become a Member to leave a comment.Or login here.